The major risks facing Kenya are rising public debt and high unemployment, especially among the youth.
A larger economy, coupled with strong growth in the coming years, means better prospects for expansion of jobs, labour earnings, investment opportunities and delivery of social services by the government.
According to the latest statistical estimates by the International Monetary Fund (IMF), the size of Kenya’s economy is projected to reach the Sh10.1 trillion mark this year.
The economy is set to record another robust expansion this year. Stronger business confidence should underpin solid growth in fixed investment, while government spending remains firm on the delivery of infrastructure projects.
Private consumption growth, however, is expected to ease, amid tighter credit conditions. FocusEconomics analysts project GDP growth of 5.8% in 2019, which is unchanged from last month’s forecast, and 5.7% in 2020.
This will mark the largest absolute expansion in recent years, with the gross domestic product (GDP) estimated to rise by Sh1.1 trillion from Sh9 trillion in 2018.
Analysts say the government needs to entrench macroeconomic stability to maintain the growth momentum. We need low inflation, predictable interest rates and an environment of policy stability to attract private sector investment,” Robert Bunyi, an investment analyst, told the Business Daily.
Kenya’s net debt, which has sparked debate over its sustainability, is forecast to stand at Sh5.2 trillion this year compared to Sh4.6 trillion in 2018.
“Massive increases of public debt from where we are will have a negative impact in terms of taxes and interest rates,” Mr Bunyi said.
The forecast Sh10.1 trillion economy would raise the country’s GDP per capita (per person) by 9.2 per cent to Sh205,408 compared to last year’s Sh188,099.
Most of the growth will, however, be captured by the super-rich and individuals in high-paying professions in line with the country’s inequality trends.
Data from the Kenya National Bureau of Statistics (KNBS) shows that 1.9 million Kenyans, representing three-quarters of those working in the formal sector, earn a salary of below Sh50,000. Millions of others are unemployed and have unreliable income sources.
Will Kenya hit the Ksh 10trillion mark considering the major risks facing the country of rising public debt and high unemployment, especially among the youth?